📰 Kashmir issue: Pakistan expels Indian envoy, suspends bilateral trade
Islamabad has also decided to review bilateral arrangements with New Delhi and to take the Kashmir issue to the U.N. Security Council.
•Pakistan on August 7 expelled the Indian High Commissioner and suspended bilateral trade in response to New Delhi’s decision to end special status to Jammu and Kashmir.
•“The Government of India has been told to withdraw its High Commissioner to Pakistan. The Indian government has also been informed that Pakistan will not be sending its High Commissioner-designate to India,” the Foreign Office said in a statement.
•Ajay Bisaria is India’s High Commissioner in Islamabad.
•The decisions were taken at a National Security Committee (NSC) meeting chaired by Prime Minister Imran Khan at his office in Islamabad. Foreign Minister Shah Mehmood Qureshi read out the NSC decisions while addressing a joint session of Parliament.
•The Committee has also decided to review bilateral arrangements and take the Kashmir issue to the UN, including the Security Council, he said.
•Pakistan will observe August 14, its Independence Day, “in solidarity with brave Kashmiris” and August 15 as a “Black Day”.
•“PM has also directed all diplomatic channels to be activated in order to expose brutal Indian racist regime, design and human rights violations. PM directed Pakistani Armed Forces to continue vigilance,” tweeted Pakistan Tehreek-e-Insaf (PTI), the ruling party.
•The NSC meeting was attended by the Foreign Minister, Defence Minister, Minister for Human Rights, Army chief, DG ISI, DG ISPR and several other senior officials of the military and the government.
•On August 6, while addressing Parliament, Mr. Khan warned that India’s decision could trigger more violent incidents in Kashmir. He had also said Pakistan decided not to pursue talks with India after having realised that India was not interested in it.
•Senior journalist Gharidah Farooqi believes that the NSC decisions have changed the dynamics of India-Pakistan bilateral relations. “Through NSC decisions, Pakistan has accepted — though not expressed in words — it’s an attack and a semi-war like situation. Through NSC decisions, Pakistan has not just shown its seriousness in condemnation of revocation of Article 370 to India but to the international community as well and would now be in a better position to convince the world for its case on Kashmir.”
•She added that calling off all kind of bilateral trade means closure of all crossing points, “which also affects Indian trade with Afghanistan”.
•Political analyst Mosharraf Zaidi says the NSC decisions represent Pakistan’s effort to express its rejection of India’s altering of the status of Kashmir. “Unlike India, it shows that Pakistan remains committed to bilateral and regional peace. But the patience of Pakistan’s leaders does not mean Pakistanis will fall in line. India’s leaders need to take actions of de-escalate tensions and ensure that there is no further brutality in Kashmir,” Zaidi told The Hindu.
‘Original Instrument of Accession was studied before decision was taken’
•Officials in the Home Ministry fished out original copies of the “Instrument of the Accession” signed with 562 princely states during the time of Independence to make a legal basis for the amendment to Article 370 taking away the special status of Jammu & Kashmir.
•The copies pulled out from the archival records were matched with the Instrument of Accession signed by Maharaja Hari Singh, the ruler of J&K, with India on October 26, 1947. “We matched the accession document of J&K with that signed with the other princely States, each and every word was the same,” an official said.
•According to him, though the legal document was the same, Article 370 was only applied in J&K.
•“The accession agreement was never an impediment for the merger of other States with India. This is what made it clear that Article 370 could be removed as it was not part of the original agreement,” he said.
•The document was to accede in respect of only the following subjects — Defence, Foreign Affairs, Communications and ancillary that included matters related to courts and electtion.
•On April 20, 1951, the Maharaja issued a Proclamation constituting a 75-member Constituent Assembly (CA) for the purposes of framing a Constitution for the State.
•Home Minister Amit Shah has said in both the Houses of Parliament that Article 370 was “originally a temporary provision.”
•“We have been doing the groundwork for the past two weeks. The move was taken after sound legal scrutiny,” said the official.
•On Tuesday night, the President of India declaration that “all clauses of Article 370 shall cease to be operative in the State of Jammu and Kashmir” was notified in the gazette of India.
•Congress leader Manish Tewari said in the Lok Sabha on Tuesday that after J&K was attacked by the Pakistanis in 1947, Hari Singh sought India’s help.
•“After J&K was attacked, Hari Singh decided that his future was in a secular India. He signed the Instrument of Accession, some promises were made...Article 370 and a separate constitution were part of it.”
•Mr. Shah told the Lok Sabha on Tuesday that Article 370(3) provided the President the powers to amend or repeal the Article by issuing a notification, based on a recommendation of the Constituent Assembly of J&K and since it doesn’t exist any more, it would be read as the Legislative Assembly.
•He added that since the Legislative Assembly of J&K was dissolved last year, its powers vested in both the Houses of Parliament.
📰 Rajya Sabha clears Bill for more judges in Supreme Court
•The Rajya Sabha on Wednesday passed a Bill proposing an increase in the sanctioned strength of the Supreme Court from 30 to 33 judges.
•The House cleared the Bill by voice vote after the government agreed to a wider discussion on the functioning of the Supreme Court in the next session.
•However, the Jallianwala Bagh National Memorial (Amendment) Bill, which seeks to remove the Congress president as a trustee, could not be taken up due to lack of broad consensus.
📰 India signs UNISA; experts call for local laws supporting treaty
The United Nations Convention on International Settlement Agreements (UNISA) was signed by 46 countries in total.
•India on Wednesday signed a key UN convention on international settlement agreements, even as experts called for local laws to support the treaty’s implementation in business contracts.
•The United Nations Convention on International Settlement Agreements (UNISA) was signed by India’s High Commissioner to Singapore Jawed Ashraf, representing the Government of India. 46 countries signed the treaty named Singapore Convention on Mediation.
•Singapore Minister of Home Affairs and Law K. Shanmugam appreciated the strong support shown by the 70 countries represented at the signing ceremony.
•He highlighted the participation by the world’s three largest economies the USA, China and India.
•“The singing of the convention is particularly important for the growth of mediation in India,” said Chennai-based senior advocate and mediator Sriram Panchu, who was part of the team organising the convention.
•“India has adopted this (convention) and with that we have significantly enhanced the ease of doing business in India,” he told PTI.
•“On the ease of doing business, as for the legal front, we are up by 50 per cent just by signing this convention and it is a dramatic jump,” said Mr. Panchu, a member of the National Legal Service Authority, India.
•But this is just a base convention that will have to be translated into an effective law in India, said the legal veteran, who had set up India’s first mediation centre in Chennai in 2005.
•To further boost foreign investors’ confidence in the Indian market, Panchu said the law supporting the convention in India should cover all government contracts with investors for mediation both in India and in a third country choice of disputing parties.
•Joining Panchu’s call for a supporting law, Sadhana Ramachandran, advocate in the Supreme Court of India, observed “the huge potential” increase in the number of mediation cases in the country.
•“We have now 80-100 matters a day with 300 mediators working in the Delhi High Court,” said Ms. Ramachandran, who is also a senior mediator in the Supreme Court and Delhi High Court.
•She expects the mediator community to grow exponentially, given the need to have a mitigation department in every law firm.
•With contract-based businesses set to boost the Indian economy to the USD 5 trillion target, foreign companies would be asking legal groups about their mediation capabilities, explained Mr. Panchu.
•He appreciated the Indian government’s accelerated approval of signing the convention a week ago, saying it would put India among the best governance class in the world.
•President of the Law Society in Singapore Gregory Vijayendra said South Asia constitutes one of the largest markets for international arbitrations under the Singapore International Arbitration Centre (SIAC), which is dominated by disputes from Indian businesses.
•Mr. Vijayendra praised the legal expertise in India, with top-class lawyers who would be able to manage mediation as they have done so with arbitration and litigation cases.
•A number of UN member countries, both the convention signatories and the ones yet to sign, will need domestic laws supporting the mediation agreements within their respective jurisdictions, he said.
•So as to expedite the implementation of the treaty in each signatory country, the convention has a model law that can be adopted, according to experts at the convention.
•With at least three signatory countries ratifying the treaty, the convention is expected to come into force from the middle of next year at the earliest, said the experts.
📰 Blackout: On Kashmir lockdown
Dissent does not have to invite measures aimed at throttling information flow
•Jammu and Kashmir remains entirely cut off, ironically, as part of the efforts at effecting its “complete integration” with the rest of the country. Rightly or wrongly, the BJP government at the Centre in its wisdom thought that annulling the special status accorded to J&K in the Constitution and demoting and dividing it into two Union Territories were essential steps towards national integration. Information flow to and from J&K has been restricted to almost nil, and media platforms reported on the momentous changes abruptly announced by the Centre without any independent account of the situation on the ground. That the world’s largest democracy could clampdown on information to the public in such a cavalier manner may appear incomprehensible under ordinary circumstances. But then, muzzling voices from J&K was only a corollary to a far more consequential directing of discourse. People in J&K even missed the Prime Minister’s tweet on how the new scheme of things would be helpful for them, as they were, and continue to be, snapped off the Internet. Reporting from conflict zones is not new to Indian media. Journalists have covered riots, insurgencies and wars for decades in the country, and governments have allowed them to do so. By and large, state agencies have even enabled reporting from conflict zones and sites of natural disasters with curfew passes and special communication facilities, though there have been exceptions. Accurate information is always the best counter to misinformation and treacherous rumours.
•Information coming out of the State is sparse, costly and hard to gather. The announcement on the withdrawal of the special status of J&K was preceded by a flurry of reporting sourced to government officials that terror threats were the reason for additional troop deployment. The Amarnath yatra was discontinued and the Valley was emptied of tourists owing to these threats. Quite likely, irrespective of the nature of the threat alerts, these measures were linked to the Centre’s decision on removal of the special status. Even before the clampdown on communication facilities, the government had been tight-fisted with information. The same attitude was evident subsequent to other critical decisions it made in recent years: official communication with the public has been strictly a one-way process, through press releases, radio monologues, and social media posts. Parliament, which ended a highly productive session in terms of business transacted, has been reduced to endorsing executive decisions with little meaningful discussions. While these are concerns that the government must address at the earliest, it must start with the immediate removal of all restrictions on movement of people and communication in J&K. Only security concerns under exceptional circumstances, and not aversion to democratic dissent in the normal course, can justify choking the information flow.
📰 The fragility of India’s federalism
The government’s Kashmir move exposes the contingent nature of India’s asymmetric constitutional provisions
•The abrogation of Article 370 has exposed ambiguities that have long been evident in India’s federal system. Asymmetric agreements have been negotiated in settlement of a number of regional conflicts in India. Kashmir’s autonomous status was the oldest and — in original conception — the most far-reaching of these provisions. But in practice, there has been a contingency to autonomy provisions, leaving them open to revision by popular majorities at the all-India level.
An altered trajectory
•The regionalisation of India’s party system between 1989-2014 contributed to the appearance that deeper federalism and growing regional autonomy vis-à-vis the Central government was an almost inexorable process. However, the rise of the Bharatiya Janata Party (BJP) to national political dominance has altered that trajectory. By abrogating Article 370 and bifurcating Jammu and Kashmir State to create two Union Territories, the BJP has demonstrated the possibility of using the inherent flexibility in the federal order to centralise power and reshape the size, powers and stature of a constituent unit of the Indian Union — the only unit with a Muslim majority population.
•The constitutionality of the abrogation of Article 370 will be carefully picked over in the months and years to come. But the government’s ability to table and pass legislation with such important consequences for the fabric of federalism — while the elected assembly of Jammu and Kashmir is in abeyance — exposes the fragile set of compromises on which India’s asymmetric federal system rests.
•Asymmetric federalism involves the granting of differential rights to certain federal subunits, often in recognition of their distinctive ethnic identity. In the case of Jammu and Kashmir, the negotiation of Article 370 was a transitional and contingent constitutional arrangement agreed in the midst of a continuing conflict while the Indian Constitution was being finalised. Over time, this ‘transitional’ clause had become a semi-permanent institutional compromise, although this was ever an uneasy compromise. Kashmir’s autonomy arrangements had been eroded under successive governments as tensions grew between the desire of Prime Ministers from Jawaharlal Nehru onwards to integrate the State more closely into the Indian Union and the desire of many Kashmiris to preserve a special status for their State. Since 1954, as many as 94 of 97 entries in the Union List and two thirds of constitutional articles have been extended to the State. This process has happened with the approval of the Supreme Court.
•Subsequent asymmetric agreements were reached with the Nagas and the Mizos, which are enshrined in Article 371 in the Constitution. When the small State of Sikkim joined the Indian Union in the early 1970s, Article 371F was added to the Constitution. Article 371F allowed for laws that were in place before Sikkim’s accession to remain in place unless amended or repealed by the legislature. Article 371 also contains measures that were intended to promote intra-State equity in Andhra Pradesh, Telangana, Maharashtra, Gujarat and Karnataka.
Contesting asymmetry
•Asymmetric constitutional provisions are a common feature of federalism in diverse societies. Many have argued that India sets an international example for how asymmetric features can help dampen secessionist conflicts by recognising multiple modes of belonging within the Union. Rather than encouraging secessionism, proponents of asymmetric arrangements argue that it is the denial of autonomy that can provide ground for secessionist claims to grow.
•However, asymmetric arrangements are often contested by majority national communities and by other regions without special arrangements. The annulment of Article 370 has long been a cause célèbre for Hindu nationalism, but it was striking that it also received wide support from many regional parties in Parliament.
•The rationale set out by the BJP this week drew on all the textbook critiques of asymmetric arrangements to attract the support of many regional parties to pass the legislation in the Rajya Sabha. These include the argument that asymmetric provisions are discriminatory, for instance, by placing prescriptions on who can own property in particular regions, or because they privilege certain kinds of ‘special’ identities over others. A Telugu Desam Party MP, from India’s first linguistic State Andhra Pradesh, welcomed the fact that India would now be ‘one nation with one flag and one constitution.’ Alternatively, asymmetric status is presented as contributing to secessionist claims, hence the argument that Article 370 is the ‘root cause of terrorism’. Autonomy arrangements are also presented as anti-egalitarian because they prevent the extension of rights in force elsewhere in a country. This last argument underscores the significance of the simultaneous emphasis on extending reservations for Scheduled Castes and Scheduled Tribes in the new Union Territories alongside the abrogation of Article 370. As the Home Minister, Amit Shah, said in the Lok Sabha: “Those who support Article 370 are anti-Dalit, anti-tribal, anti-women.”
A deliberate flexibility
•By design, India’s federal institutions place relatively weak checks on the power of a government with a parliamentary majority. As the political scientist, Alfred Stepan, identified, federal systems can be more or less ‘demos constraining’. In those at the more ‘demos constraining’ end of the spectrum, federalism serves to undermine the consolidation of power by national majorities. For instance, the American theorist, William Riker, saw American federalism as a counter-weight to national populism since ‘the populist ideal requires that rulers move swiftly and surely to embody in law the popular decision on an electoral platform’. By contrast, other federal systems, such as India’s, are more ‘demos-enabling’. This means that the design of federalism places fewer checks on the power of national majorities. For instance, the composition of the Rajya Sabha mirrors the composition of the Lok Sabha, rather than providing equal representation to States regardless of size, and the Rajya Sabha has weaker powers than the Lower House. Fewer powers are constitutionally allocated to federal subunits exclusively compared to more demos-constraining federations.
•Placing this kind of flexibility in the hands of the Central government was deliberate and designed to enable decisive Central action to protect national integrity in the aftermath of Partition. In the Constituent Assembly, B.R. Ambedkar highlighted the difference between the ‘tight mould’ of other federal systems and the flexibility hard-wired into India’s which would enable it to be both ‘unitary as well as federal’ according to the requirements of time and circumstances.
•This constitutional permissiveness has been used to do things that have deepened federalism in the past under both Congress and BJP-led governments, such as the creation of new States in response to regional demands from the linguistic reorganisation of States in the 1950s onwards. By granting the Central government the power to create new States or alter State boundaries under Article 3, and not giving State governments a veto over bifurcation, the Constitution enabled the Central government to accommodate linguistic and ethnic diversities in a way that would have been much harder in a more rigid federal system. It also enabled the Central government to adopt asymmetrical measures in the first place without facing a backlash from other regions that might have resented the ‘special’ treatment of minority regions. Until the 2000s, most of these changes were done based on a slow process of consensus building within the regions concerned.
The unknown
•By abrogating Article 370, bifurcating Jammu and Kashmir and downgrading the status of the successor units to Union Territories, the government has used the flexibility of the federal provisions of the Constitution to other ends. This is not the first time that a Central government has used its powers to bifurcate a State in the absence of local consensus. This was also seen with the creation of Telangana in 2014. As in the case of Telangana, the creation of the Union Territory of Ladakh does respond to a long-run demand in this region with a substantial Buddhist population. However, the decision to transform the remainder of J&K State into a Union Territory, at the same time as annulling Article 370, is a departure with profound and as yet unknown consequences in Kashmir, and wider implications for Indian federalism.
📰 Centre unveils plan for coastal zone management
The plan will lay out guidelines out for coastal States to adopt when they approve and regulate projects in coastal zones.
•The Environment Ministry has unveiled a draft plan that will dictate how prospective infrastructure projects situated along the coast ought to be assessed before they can apply for clearance.
•The draft Environmental and Social Management Framework (ESMF) is part of a World Bank-funded project.
•The document lays out guidelines out for coastal States to adopt when they approve and regulate projects in coastal zones.
•“The project seeks to assist the Government of India in enhancing coastal resource efficiency and resilience, by building collective capacity (including communities and decentralised governance) for adopting and implementing integrated coastal management approaches,” the introduction to the report notes. The document was prepared by the Society for Integrated Coastal Management, a Ministry-affiliated body.
•Integrated coastal zone management (ICZM) has to be a continuous process rather than a “one-off” investment action, the report said.
•So far three coastal States, namely Gujarat, Odisha and West Bengal, have prepared Integrated Coastal Zone Management Plans with support from the World Bank.
•Such plans would be prepared for the selected coastal stretches in other States/UT, the project notes.
Proposed activities
•The key activities proposed for coastal zone development that consist of investments by States include: mangrove afforestation/shelter beds, habitat conservation activities such as restoration of sea-grass meadows, eco-restoration of sacred groves, development of hatcheries, rearing/rescue centres for turtles and other marine animals, creation of infrastructure for tourism, restoration and recharge of water bodies, beach cleaning and development, and other small infrastructure facilities.
•Livelihood improvement projects include demonstration of climate resilient or salinity resistant agriculture, water harvesting and recharge/storage, creation of infrastructure and facilities to support eco-tourism, community-based small-scale mariculture, seaweed cultivation, aquaponics, and value addition to other livelihood activities.
•The plan describes how “environmental and social aspects” ought to be integrated into the planning, design, implementation of projects.
•“Projects should strive to avoid or minimise impacts on cultural properties and natural habitats, compensate any loss of livelihood or assets, adopt higher work safety standards, occupational and community health and safety,” the document underlines.
•Inadequate planning has often obstructed coastal zone development projects. On June 16 the Bombay high court struck down the Coastal Regulation Zone (CRZ) clearance for its ₹14,000-crore Coastal Road, which is part of the Eastern Freeway to be constructed to provide an alternate speedy connect between South Mumbai and Western suburbs. This was on the grounds of an inadequate scientific study by the Maharashtra Coastal Zone Management and lapses by the Union environment ministry which had overlooked these lacunae.
📰 ISRO’s mini launcher SSLV is unborn but has 2 flights booked
A military launch first, multiple small US satellites to follow in 2019-20
•Mini space transport service SSLV (Small Satellite Launch Vehicle) of the Indian Space Research Organisation (ISRO) has not even been “born” or unveiled. Yet it is already booked by two users – an Indian government customer and an overseas one. The deal with the foreign firm is also the first publicly announced one formalised by the barely five-month-old NewSpace India Ltd (NSIL), ISRO's new commercial arm.
•U.S.-based launch service organiser Spaceflight Inc. announced on Tuesday night that it had fully booked the “entire first commercial manifest [launch] of SSLV-D2”, slated for “later this year” for an unnamed customer. (D2 indicates the vehicle's second demonstration or test launch.) The ISRO rocket would place four small earth observation satellites in two separate orbits.
For defence first
•ISRO Chairman K. Sivan told The Hindu that before the commercial flight, the SSLV’s maiden flight may happen by the end of December. It would place a single Indian defence earth observation spacecraft of 500-kg class in a low-earth orbit. SSLV, the untested mini load-lifter, banks on the reputation of its elder sibling, the PSLV, considered an international favourite for its high reliability in safely and precisely placing small customer satellites in orbit - and at competitive prices.
•The PSLV has so far lifted nearly 300 (mostly small) customer satellites to space and holds the world record for the highest number of 104 satellites launched in a single flight in February 2017.
Bridging a gap
•Spaceflight quoted its CEO and president Curt Blake as saying, “The SSLV is the much-needed solution to fill the gap in the portfolio of small launch vehicles.” Designed for launches on demand with very short gaps between two flights, the SSLV, he said, “is perfectly suited for launching multiple micro-satellites at a time and supports multiple orbital drop-offs.”
•The SSLV can lift satellites of up to 500 kg to space and which a handful of people can put together in three days - compared to a few months for the bigger rockets.
•Mr. Blake indicated that Spaceflight planned to bring in many more paid rides on the SSLV: “first to LEO [low earth orbit] mid-inclinations this year and SSO [sun-synchronous orbit] missions starting in the fall of 2020.”
•If we were to join a few dots for Spaceflight's customer, the company owns BlackSky Global, which is readying a constellation of 60 small “Pathfinder” EO satellites at a 450-km orbit.
•Back in September 2016, Spaceflight arranged to launch a test micro-satellite called BlackSky-1 Pathfinder as a piggyback on a PSLV.
•Spaceflight also arranged rideshares or launches of 21small international satellites on the PSLV mission of last April.
Market boom
•“We’re taking advantage of the growth in the small satellite market to deliver more launch options with the mini-launcher, and look forward to many more launches with Spaceflight,” said NSIL Director D. Radhakrishnan.
•Globally launchers are a seller's market with too many small satellites getting ready for different uses and not many vehicles ready to fly them to space when they want to. This is the niche ISRO eyes for its SSLV.
•In a just released forecast for the decade 2019-2028, Alexandre Najjar, consultant for space industry monitor Euroconsult and editor of the report, said, “The smallsat market continues to grow in significance for investors, manufacturers, the supply chain, and a range of other stakeholders.”
•According to Euroconsult, the launch and manufacture of small satellites together can increase about 3.5 times in the coming decade - from $ 12.6 billion in 2009-18 to $ 42.8 billion 2019-28. The next four years through 2023 would see an average of 835 smallsats launched each year; and 8,600 smallsats lined up for launch during the next decade.
•The last two years set the tone for the growth with a 93% increase in the number of smallsats launched compared to 2014-16.
📰 RBI’s Goldilocks cut: On repo rate cut
The government must now unleash measures to boost growth
•Faced with slowing GDP growth and encouraged by benign inflationary trends, the Reserve Bank of India (RBI) has delivered a Goldilocks cut of 35 basis points in the benchmark repo rate. Though a rate cut was a foregone conclusion ahead of the monetary policy announcement, the expectation was of either a 25 or 50 basis points one. Given the extent of the slowdown in the economy, the Monetary Policy Committee (MPC) deemed the former as too low but taking into account factors such as the turbulence in the global financial markets and the rupee’s fall in the last few days, the latter was seen as too high. In the event, the MPC settled on a median and unconventional 35 basis point cut, which keeps the powder dry for further cuts this financial year. With this, the RBI has cut rates in four consecutive policy announcements beginning February this year, aggregating to a total of 110 basis points. But the transmission by banks to lenders has not been even a third of this. The central bank says that banks have passed on just 29 basis points which is poor indeed. One factor inhibiting transmission was the tight liquidity conditions until June when the RBI flooded the market — in fact, the last two months the central bank has had to absorb excess liquidity floating around. There is, therefore, reason to hope that transmission from hereon would be quicker.
•The repo rate at 5.40% is now at a nine-year low and is headed lower in the next few months and could well settle at 5% or very close to that by the time this rate cutting cycle plays out. Supporting this theory is the fact that inflation is projected to be benign for the next one year. Growth, on the other hand, is expected to be weak and the MPC has revised downwards the projected GDP growth rate for this fiscal to 6.9% from 7% earlier, with downside risks. Even this appears optimistic given the current impulses in the economy and it is very likely that GDP growth this fiscal will be closer to 6.5%. With the latest cut, the RBI has signified that it is willing to do the heavy lifting. But this alone will not suffice as cost of capital is just one aspect that determines investment. The government has to play its part too in boosting growth. Arguably, the space for fiscal concessions is limited given the overall revenue scenario, but the government can certainly push for further reforms to incentivise investment without impacting its fiscal arithmetic. The slowdown now is part cyclical — which can be addressed by a rate cut — and part structural, for which reforms are an absolute necessity. Therefore, unless the government responds with its own measures, the RBI’s efforts to support growth may go in vain.
📰 RBI lowers repo rate by 35 basis points to 5.40%
All six members of the Monetary Policy Committee voted in favour of the rate cut.
•The Reserve Bank of India has decided to lower interest rate for the fourth consecutive policy review as it reduced repo rate by 35 bps to 5.40%.
•All six members of the Monetary Policy Committee (MPC) voted in favour of the rate cut. The MPC noted that inflation is currently projected to remain within the target.
•“Since the last policy, domestic economic activity continues to be weak, with the global slowdown and escalating trade tensions posing downside risks. Private consumption, the mainstay of aggregate demand, and investment activity remain sluggish. Even as past rate cuts are being gradually transmitted to the real economy, the benign inflation outlook provides headroom for policy action to close the negative output gap. Addressing growth concerns by boosting aggregate demand, especially private investment, assumes the highest priority at this juncture while remaining consistent with the inflation mandate,” RBI said.
•Governor Shaktikanta Das on Wednesday termed the steeper cut as a “balanced” call given the domestic and global developments.
•He explained that a 0.25 percentage points reduction, as it has done thrice this year since February, would have been “inadequate”, while a 0.50 percentage points cut would have been “excessive”.
•Mr. Das said the RBI has been pre-emptive in its actions on rates and the policy stance through the year and has also provided adequate liquidity to the system always.
•Addressing the media at the customary post-policy presser, Mr. Das said there is nothing sacred about multiples of 0.25 percent cuts and also made it clear that the rate call cut has not been taken on “gut feel” but on hard data.
•“Too much should not be read into it, it is judgement call which the MPC has taken,” he said, adding that it was “prudent” to be accommodative.
•The RBI will ensure that there is sufficient liquidity is available for the economy.
•Expressing satisfaction on the transmission process by saying that the financial markets have fully absorbed the benefits of the three past rate cuts and expressed confidence that there will be more rate cuts in the future by the banks.
•Mr. Das said the decision of the MPC is its “own autonomous, independent decision”.
•To a question on real interest rates and the levels which the central bank is targeting, he said this is not the right time to look at that aspect as the RBI focus is to meet the output gap.
Highlights
* RBI cuts key interest rate (repo) by an unusual 35 basis points (0.35 percentage points) to 5.40 per cent.
* Reverse repo rate has been revised to 5.15 per cent
* The marginal standing facility (MSF) rate and bank rate stands at 5.65 per cent
* Maintains the accommodative policy stance
* Cuts GDP forecast to 6.9 per cent for the current fiscal from 7 per cent in June policy
* Keeps retail inflation forecast within target of 3.5-3.7 per cent for second half of 2019-20
* Four members voted for cut of 35 basis points in rate; two members voted for 25 basis points rate cut
* Boosting aggregate demand, private investment assume highest priority
* Next monetary policy statement on October 4.
📰 The big picture on tigers
While the number of wild cats has increased, infrastructure expansion plans have totally discounted their presence
•The tiger, which once sat crouching, is now roaring in India. Results of a once-in-four-years estimation of tiger numbers show us that India has about 3,000 of them. This is relevant not only nationally, but also globally — this is a majority of the world’s wild tiger population, of around 4,000 tigers.
•Each year, the tiger estimation increases its scope. Camera trap images, findings of foot surveys and other evidence on tigers and their prey species are collected. The latest estimate says that we have approximately 2,967 tigers in India, up from 2,226 as per the 2014 count. The scope of the effort was different this time: while the 2014 count included tigers that were over 1.5 years of age, this one included tigers as young as one-year old.
•Yet, we must look at numbers, especially that on young tigers and cubs, as just one indicator in the tiger story. A couple of days before World Tiger Day (when the tiger report was released), a tigress was beaten to death in fields near the Pilibhit Tiger Reserve. Two days after the report’s release, a tigress and her cub were found dead near Bandhavgarh in Madhya Pradesh. Shortly after, another cub was found dead in Umaria in the same State. Earlier in July, there were the poisoning-caused deaths of a tigress and her two cubs in Chandrapur, near the Tadoba Tiger Reserve in Maharashtra.
Widening of rail, road networks
•It may seem that these are stray cases with no real pattern. But while tigers are reproducing in India, new state policies are working directly against them. Relaxations in norms to allow for a widening of highway and railway networks are the new threats, adding to the old ones of retaliatory poisoning and poaching.
•A report on management effectiveness of tiger reserves was also released on World Tiger Day. The report rated Pench Tiger Reserve in Madhya Pradesh as the best in terms of good management practices. This is fairly commensurate with its tiger numbers. Central India is one of the best tiger nurseries in India. Of all States, Madhya Pradesh has the highest number of tigers, over 500 of them.
•Yet, tiger reserves cannot control what is around them; and the Pench tiger faces a new threat. The National Highway 7 (NH7), which connects Pench and Kanha tiger reserves, has just been widened. Tigers, as well the animals they prey on, find it hard to cross roads; for instance, a tiger died near Dehradun in 2016 after being hit by a speeding vehicle. It may have been from Rajaji Tiger Reserve, an area that needs more male tigers. After sustained pressure from citizens and protests from the Madhya Pradesh forest department, authorities built underpasses meant for wildlife through NH7. But go down the spanking new highway in Maharashtra, and it has barriers on the road. It isn’t much of a surprise then that a tiger was recently seen climbing the barrier to cross the road.
•To put this incident into perspective, most National Highways are slated for widening and upgradation, and most tiger reserves have State or National Highways around them. Each year, thousands of animals die on the road. Apart from highways, railway and irrigation projects are coming up in tiger reserves, and the Ken-Betwa river interlinking project will submerge 100 sq. km of Panna Tiger Reserve.
•So, while the numbers are reason to cheer, they can hardly be the whole story. The story is beyond and around the reserve boundaries that tigers have to cross. The numbers should also give pause to the plans being made discounting the presence of tigers. This is a time for thoughtful growth. Highways and railways should not be expanded to encroach into tiger areas; irrigation projects should also avoid the areas. Cost-benefit analyses need to take into account the needs of wild animals. At the moment, highways are not even able to do away with barriers, and it is assumed that tigers can swim through dam-submerged areas. So, to live, tigers are being made to swim across dams, cross highways, dash across railway lines, not eat livestock, and avoid people.
•Currently, a group of tigers stand not too far from Bhopal. They may have come from the Ratapani Tiger Reserve, but the question is: what fate awaits them — roadkill, electrocution or poisoning? The question is bleak, but the answer need not be. Prime Minister Narendra Modi said that development and environment do not need to come at each other’s cost. This is true. And while tigers do not vote, our mandate to save them has never been greater.
